Public naming now mandatory for violations of anti-money laundering laws

The naming provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) were amended on June 21 when Bill C-97, The Budget Implementation Act, 2019, received royal assent. Now, any financial institution, securities dealer, money services business or other reporting entity that is issued a notice of violation for violating provisions of the PCMLTFA or its regulations must be publicly named by FINTRAC.

What you need to know

• A reporting entity that is issued a notice of violation by FINTRAC will be named if it: pays the penalty associated with the notice of violation; is unsuccessful in its representations to FINTRAC’s director with respect to the notice of violation; enters into a compliance agreement with FINTRAC with respect to the notice of violation; or fails to respect the terms of a compliance agreement.
• FINTRAC’s public notice will disclose the name of the reporting entity, the nature of the violation and the penalty amount.
• Reporting entities can no longer delay public naming by appealing the notice of violation to the federal court.

Mandatory disclosure

In the past, FINTRAC had the discretion to decide whether to publicly name a reporting entity that was issued a notice of violation under the PCMLTFA. Now, FINTRAC must publicly disclose the name, nature of the violation and penalty amount as set out in the revised section 73.22 of the PCMLTFA when:

1. a notice of violation is issued and the party pays the penalty;
2. a notice of violation is issued, the party does not pay the penalty and within 30 days of the issuance of the notice of violation, fails to submit representations to the director of FINTRAC regarding the violation;
3. the director decides, despite a party’s representations on the notice of violation, that a violation did occur;
4. a party enters into a compliance agreement with FINTRAC as a result of a notice of violation being issued; or
5. a party defaults on any term of a compliance agreement between itself and FINTRAC, and as a result of this default, a notice of default is issued.

With these changes, reporting entities may wish to consider making a voluntary disclosure of any potential violations of the PCMLTFA before FINTRAC initiates its next compliance review. It is to the reporting entity’s advantage to advocate for its position early in the FINTRAC review to maximize the opportunities to influence the outcome of the review. Further advocacy efforts are also required upon receiving FINTRAC’s findings following the review.

These changes should be considered in light of FINTRAC’s updated approach to assessing penalties for violations of the PCMLTFA (described in “FINTRAC’s new AMP policy: Does it solve issues only to create others?”), and upcoming changes to the regulations.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

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